Madison Wisconsin's Estate Planning Blog

Planning ahead has obvious benefits. Whether you’re planning a vacation or researching for a job interview, it’s always smart to outline your priorities and anticipate potential challenges that may arise. Planning your estate has similar benefits. With plans clearly established, your wealth and assets are protected should you pass away or become incapacitated. It’s important to be aware, however, that simply meeting with an attorney and signing a trust does not mean your estate planning process is complete.
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A will or trust contest can derail your final wishes, rapidly deplete your estate, and tear your loved ones apart. But with proper planning, you can help your family avoid a potentially disastrous will or trust contest. 

If you are concerned about challenges to your estate plan, consider the following:

1. Do not attempt “do it yourself” solutions. If you are concerned about an heir contesting your estate plan, the last thing you want to do is attempt to write or update your will or trust on your own. Only an experienced estate planning attorney can help you put together and maintain an estate plan that will discourage lawsuits and ensure all legal formalities are followed.
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Most families are happy families. They get together for the holidays, share laughs, and tell stories. Everyone gets along and enjoys each other’s company. Then, the matriarch or patriarch dies. Suddenly, years of pent-up resentment and hurt feelings bubble to the surface, and the once-happy family is now embroiled in litigation over the decedent’s estate.
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A common misconception is that only wealthy families and people in high risk professions need to have an asset protection plan. But in reality, anyone can be sued. A car accident, foreclosure, unpaid medical bills, or an injured tenant can result in a monetary judgment that will decimate your finances.

What Exactly Is Asset Protection Planning?

Asset protection planning is the use of legal structures and strategies to safeguard property that creditors might snatch away, by completely, or, at the very least, partially, protecting it from the creditor’s reach.

Unfortunately, this type of planning cannot be done as a quick fix for your existing legal problems.
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In all parts of the country, services such as Airbnb have grown in popularity over the past few years. Indeed, these alternatives to hotel stays are popular among homeowners and vacationers alike. If you have a home or other rental property that is generating income, you should understand the following asset protection and estate planning considerations.

Protecting Owners from Liability

Just like any rental relationship, there is risk for the property owner. If anyone is hurt on the premises during their stay – no matter how short – a property owner could be held legally and financially liable for injuries suffered.
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Many believe that estate planning is simply instructions on how to distribute your assets when you pass away, but the reality is that proper estate planning can do much more. While one major benefit of estate planning is to provide for your family and friends when you are gone, there are many benefits for you as well. 

Additional Benefits of Estate Planning

Life can give us surprises, both good and bad. Estate planning can help you be prepared for  some unfortunate surprises in life. This is because proper estate planning includes planning for you and your care in the event you become incapacitated.
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Many people believe that once they set up a Revocable Living Trust and transfer assets into the trust, those assets are protected from lawsuits. This is absolutely not true. 

While Trusts commonly provide asset protection for beneficiaries, few trusts protect assets owned by the person who created the trust.

No Immediate Asset Protection?  Why Should You Create a Revocable Living Trust?

Fully funded Revocable Living Trusts are excellent tools.  Here’s why: 

1. You can protect assets passing to your spouse and children, providing protection for loved ones that they can’t put in place for themselves.
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While we all want to provide financial help to our loved ones—whether they are family or close friends—it is important to understand that how the money is classified will directly affect your estate planning. Accordingly, the intent behind the transfer of the money is key when determining if it will be considered a loan, gift, or advancement.

Understanding the Differences

Loan

If there is a mutual understanding that the money you gave to a loved one is to be paid back, this is considered a loan—whether the so-called loan was documented or not. If the money lent is not paid back before you pass away, the sum is still owed to your estate by the borrower. The loan becomes an asset of the estate.
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If you are thinking about putting together an estate plan, it is important to consult with an attorney who is knowledgeable and experienced in this area of law. Your initial meeting with an estate planning attorney is a good opportunity to discuss your family’s financial situation as well as your concerns and goals. If you are able to prepare ahead of time for this meeting, there are several items you should bring with you to benefit the most from the consultation.

Helpful Information to Bring With You

Before meeting with the attorney, consider writing down your goals and wishes for your estate plan - or the concerns or worries that prompted you to make the appointment. You may want to jot down specific information you want the attorney to know about your family dynamics, such as beneficiaries or family members you want to include or about or the fact you have a blended family.
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So you have done the hard work of establishing an estate plan. Good for you! However, you still have serious work to do to ensure that the strategy you have selected will maximize your peace of mind and protect your legacy. 

Estate plans should be like living, breathing creations that reflect the changes in your life. Your life can and will change due to new births, children getting older, and other shifts in the family; changes to your investment portfolio, career and business; and changes to your health, where you live, and your core values. Likewise, external events, such as new tax legislation passed in your state or the development of a novel financial instrument, can throw your plan off track or open the door to new opportunities.
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Whether or not you currently have estate planning documents, one important item to add to your calendar is getting an estate plan checkup.

Don’t Have an Estate Plan? 

If you don’t already have an estate plan, then getting one in place should be at the top of your to-do list.

Why?  Because without an estate plan, you and your property may end up in a court-supervised guardianship if you become incapacitated, and your property and your loved ones may end up in a time-consuming and expensive probate proceedings after you die.

Worse yet, if you don’t take the time to have any estate planning done, then the state where you live at the time of your death will essentially write one for you. It may not divvy up your property the way you would have and certainly will not protect your heirs the way you would.
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